An Infant Industry Firm May Be Reluctant to Borrow from Private

question 25

Multiple Choice

An infant industry firm may be reluctant to borrow from private markets instead of relying on a public subsidy when they fear that

• A) experienced workers will go to work for other firms.
• B) private capital markets are too efficient.
• C) private capital markets are too week.
• D) they will not achieve sufficient economies of scale.
• E) governments will not extend them loans.

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Definitions:

Actual Price Level

The current general level of prices for goods and services in an economy, which can be compared to past levels to assess inflation or deflation.

Expected Price Level

The anticipated average price of goods and services in an economy over a future period, which influences consumer and business decisions.

Long-Run Aggregate-Supply

The total output of an economy when all resources are fully employed, with prices of inputs and outputs able to adjust to any changes.

Real GDP

The inflation-adjusted value of all goods and services produced within a country's borders in a year, reflecting the actual productivity of an economy.